Softbank In Talks To Buy Stake In Reinsurance Giant Swiss Re

Update (3pmET): Swiss Re confirms that it's in talks with Softbank about a possible investment.

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A few months after it purchased a sizable stake in Uber industries - receiving some of its shares at a discount - the Wall Street Journal reported Wednesday that Japanese conglomerate Softbank is in advanced talks to buy a stake in Swiss Reinsurance giant Swiss Re.

It’s not clear whether the money for the Swiss Re investment would come from SoftBank itself or its "Vision" fund, which company founder Chief Executive Masayoshi Son once pledged to use to create thousands of US jobs during the wake of President Donald Trump's electoral victory.

The deal being discussed calls for the purchase of up to a third of Swiss Re’s shares at a premium, according to people familiar with the matter. Swiss Re shares currently trade at about 90 Swiss francs, giving the company a market value of 31 billion Swiss francs, or about $33 billion.

The Zurich company’s management in recent weeks traveled to Tokyo to meet with top SoftBank officials including Chief Executive Masayoshi Son, the people said. As always, the talks could still fall apart and there might not be a deal.

The talks are the latest sign of Mr. Son’s seemingly boundless, if sometimes quixotic, ambitions. He is recasting SoftBank, Japan’s largest mobile-phone carrier and majority owner of U.S. wireless carrier Sprint Corp. , as a global technology conglomerate, laying bets on everything from e-commerce to driver-less cars and virtual reality.

As expected, Swiss Re's shares spiked on the news...

SoftBank is best known for its tech investing pool - known as the Vision Fund - which has plowed billions of dollars into private startups including broadband satellite company OneWeb Ltd., co-working firm WeWork Cos. - and, of course, Uber.

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According to Recode, the Japanese conglomerate disclosed late Tuesday that its giant investing fund had already invested just under 40% of its pool of cash. That should quiet some critics who say it is impossible to spend that much money that quickly.

The Vision Fund and its companion, the $6 billion Delta Fund, invested $27.5 billion through the end of last year, according to a new quarterly earnings report from SoftBank.

When you throw in the $7.7 billion invested in Uber and $4.6 billion in Didi Chuxing earlier this year, the funds have spent $40 billion of their the $106 billion total.

Masa Son has a vision for the future. He is putting the pieces together, even if they are not currently profitable, to support and profit from his predictions. He could be wrong, but at least he is planning 20, 30 years ahead instead of buying back shares...

Personally, I don't think humans (society, whatever you want to call it) will continue the status quo & advance for the decades it will take to achieve quantum computing and AI.

Interesting. The reinsurers Munich Re and Swiss Re took huge losses this year (roughly $135B each) from the natural catastrophe events in 2017. My sense is that they're both adequately capitalized and this does not put either in jeopardy.